Nick and Carol* have a substantial estate that will be subject to Inheritance Tax (IHT).
We had worked with Nick and Carol on their finances for some time and reached a point where addressing IHT was a sensible action to take. This would mean that their wealth was protected within the family for generations to come, but some careful planning would be needed first .
Different types of investments are treated differently when it comes to IHT, so by changing where their money was being held we could help Nick and Carol alter how much tax would be due.
Firstly, of course, we revisited Nick and Carol’s current plan, particularly their income requirements to make sure everything was working as it should for them. We established how much was available to potentially be moved into a different type of investment for IHT purposes and checked that their plan was still on track.
Eventually, after careful investigation and planning, which also involved Nick and Carol’s accountant, we moved a substantial figure into a different type of investment. This investment type was higher risk than others within Nick and Carol’s portfolio, but allowed the couple to maximize the opportunities of a tax break and take advantage of relevant government initiatives.
To balance this risk, the funds were invested across a portfolio with many different managers, mitigating some of the risk involved. Nick and Carol also retained some lower risk investments across their portfolio, which balanced their overall risk levels.
The outcome for Nick and Carol is that they still have a financial plan which is on track to provide them with everything that they need. Their risk is still balanced across their whole investment portfolio to a level that we and they are comfortable with and they have protected part of their wealth for the next generation. Nick and Carol now have a forward-thinking, long-term plan which works for them now and for their family for years to come – exactly what good financial planning should do!
The value of your investments can go down as well as up, so you could get back less than you invested.